Trawick v. Manhattan Life Insurance Co. of NY, NY

• Decision Date: 28 October 1971
• Docket Number: No. 30981.,30981.
• Citation: 447 F.2d 1293
• Parties: Mrs. Myrtle H. TRAWICK, Plaintiff-Appellant, v. The MANHATTAN LIFE INSURANCE COMPANY OF NEW YORK, NEW YORK, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

447 F.2d 1293 (1971)

Mrs. Myrtle H. TRAWICK, Plaintiff-Appellant, v. The MANHATTAN LIFE INSURANCE COMPANY OF NEW YORK, NEW YORK, Defendant-Appellee.

No. 30981.

United States Court of Appeals, Fifth Circuit.

August 31, 1971.

Rehearing and Rehearing Denied October 28, 1971.

Erwin C. Ward, James A. Peden, Jr., Stennett, Wilkinson & Ward, Jackson, Miss., for plaintiff-appellant.

David Williams, Wilbourn, Williams & Glover, Meridian, Miss., for defendant-appellee.

Before GOLDBERG, GODBOLD, and RONEY, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 28, 1971.

GOLDBERG, Circuit Judge:

In this diversity litigation concerning the validity of life insurance policies, the trial court, after a jury had solemnly come to a decision, made a post-trial evaluation of the life insured's relationship with the insurer. While we accede to the trial judge's postmortem assessment to the extent of granting a new trial, we deny his complete veto of the jury's determination by entry of judgment non obstante veredicto.

In 1968 the defendant, Manhattan Life Insurance Company of New York, issued two life insurance policies having a total face value of $130,000 to Harrison H. Trawick. When the insured succumbed to a heart attack in 1969, the defendant refused payment of the death benefits to the widow, Plaintiff Myrtle H. Trawick, pinioning its absolution on material misrepresentations by the insured in answering certain medical questions in the policy applications. The defendant claimed that the insured's failure to disclose his extensive history of heart disease constituted a forfeiture of the two policies.

As a result of the defendant's nonpayment, the plaintiff instituted two actions, one on each policy, in a circuit court of Hinds County, Mississippi. The plaintiff sought recovery under a theory of waiver of forfeiture, alleging that Manhattan Life issued both policies with knowledge of the insured's cardiac ailment. On motions of the defendant, both actions were removed to a federal district court, and a consolidated trial resulted in a jury verdict for the plaintiff in the principal amount of $130,000. Thereafter, the trial court granted the defendant's motion for judgment notwithstanding the verdict, and, pursuant to Rule 50(c) of the Federal Rules of Civil Procedure, conditionally granted the defendant a new trial in the event the judgment was reversed on appeal. Aggrieved by the district court's peremptory ruling, the plaintiff appealed.

As a general rule, a material misrepresentation made by an applicant for an insurance policy and relied upon by the insurer justifies the rescission of that policy. Apperson v. United States Fidelity & Guaranty Co., 5 Cir. 1963, 318 F.2d 438, 441, and cases cited therein. However, Mississippi courts have long recognized the doctrine of waiver of forfeiture as an important limitation to an insurer's defense of material misrepresentation. See, e. g., United States Fidelity & Guaranty Co. v. Yost, 1938, 183 Miss. 65, 183 So. 260, 185 So. 564; Stonewall Life Insurance Co. v. Cooke, 1932, 165 Miss. 619, 144 So. 217. In its most recent pronouncement on the subject of waiver of forfeiture the Mississippi Supreme Court stated:

"An insurer may waive the right to forfeit or rescind a policy of insurance * * * by recognizing the validity of the policy and continuing it in force after knowledge of circumstances entitling it to avoid the policy."

Casualty Reciprocal Exchange v. Wooley, Miss.1969, 217 So.2d 632, 636.

Against this background of substantive law, the crucial inquiry at the trial of this case was whether or not the defendant knew prior to the issuance of the policies that the insured had a history of coronary disease. The jury's resolution of this conflict was in favor of the plaintiff. But the district court reversed this determination, by entry of a judgment notwithstanding the verdict, on the basis that the undisputed evidence showed that the defendant had no actual knowledge concerning the insured's heart condition. Plaintiff vigorously contests this conclusion, and asserts that the record reflects substantial evidence from which the jury could have found that the company had actual knowledge of the insured's physical condition prior to the issuance of the policies and that such knowledge operated as a waiver to prevent the company from interposing its defense of material misrepresentation. We find merit in plaintiff's protestations and accordingly reverse.

Within the realm of peremptory instructions, this court has recorded numerous testimonials to the proper relationship between a trial judge and a jury.¹ While judicial interference with jury resolution is clothed in an aura of centuried perdurance, a trial judge's epilogue has never been deemed so sacrosanct as to escape scrutiny. We therefore turn our attention to the task of scrutinizing, applying the following federal standard for testing the sufficiency of the evidence:

"On motions for directed verdict and for judgment notwithstanding the verdict the Court should consider all of the evidence — not just that evidence which supports the nonmover\'s case — but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motion is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury. * * *"

Boeing Co. v. Shipman, 5 Cir. 1969, 411 F.2d 365, 374.

Our examination of the record in this case reveals the undisputed fact that the defendant had in its possession prior to the issuance of the policies four electrocardiogram readings EKGs on the insured. Plaintiff's medical expert testified that these EKGs showed myocardial infarction and that "there's just almost no other probability * * *. There is not really any doubt." The defendant's medical expert testified that the four EKGs were sufficient evidence to put him on...